Full Sail Partners Blog | Michael Kessler, PMP (2)

Posts by Michael Kessler, PMP:

Why C-Level Financial Types Are More Interested in CRM than Ever

Posted by Michael Kessler, PMP on May 03, 2017

CRM for Financial LeadersThere has been an uptick in interest recently from C-Level financial leaders to become more involved with the CRM functions within Vision. You may ask yourself why this new trend is occurring since the CRM module of Vision is for marketing and business development functions. The reason must surely be based on an informational need so that actionable decisions can be made.

CRM Information for Financial Leaders 

CRM databases are full of information to help the marketing and business development team drive new business. So, what information can provide financial leaders the insight they need to make better decisions?  

  1. The Life Cycle of Projects – More often than not, a project is born during the opportunity stage. More specifically, the opportunity can trigger a promotional project and/or a resource plan. As a result, there are financial considerations that must be taken into account: 
  • The numbering of both the promo project and the plan
  • Determining when the pursuit trigger will need to include resources in the staffing heat map
  • Figuring out the rate tables and a multiplier that are going to be used in the plan 
  1. Pipeline and Backlog – A conversation that often occurs between a CFO and director of business development is about the movement of future revenue from the pipeline to soft backlog to hard backlog. This can result in some level of double counting and is especially prevalent in task ordering agreements or infinite deliver/infinite quantity (IDIQ’s). C-Level financial people need to be involved in the definition stage of how future revenue is separated and quantified.
  2. Cost of Winning and Losing Work – Opportunities afford us the ability to track hit rates. These are metrics showing win/loss ratios and can be filtered by unique attributes that are meaningful to your organization. One suggested attribute to track separately is sole source versus competitive wins. From this metric, financial managers can begin to quantify and measure the effort that goes into these wins and losses. However, this requires creating a promo project once the decision is made to bid on an opportunity.
  3. Utilization – Having the fluidity to evaluate time spent on a proposal is a value add. Moreover, C-Level financial types are also aware of utilization. By moving time from a promo project to a regular type project, the time moves from non-productive to productive. When we use Vision functionality to isolate proposal time on utilization reports, it provides insight into why employees are not being productive. 

Sharing Information Firm Wide

It’s always best practice to share important firm data with key individuals from all teams, but those people should also be able to find the information on their own. Like this new trend for financial leaders to learn more about using the CRM module in Vision, marketing and business development people also need to know how to access information from the financial side of Vision. Most importantly, everyone should be involved in the implementation of all Vision modules to ensure the initial setup, data structure and reports are valuable to the firm.

Deltek Vision CRM Top 10 Features

KPI - the New Industry “Buzz” Word

Posted by Michael Kessler, PMP on April 19, 2017

KPIs A KPI, or Key Performance Indicator, is a measurable value that demonstrates how effectively a company is achieving crucial business objectives. Organizations should use KPIs to evaluate their success at reaching targeted goals. Simply stated, KPIs provide your firm with metrics that compare budgeted amounts to the actual values. KPIs are no longer just for accounting and finance as they now reach deeper into a firm’s operational side examining marketing, business development and project management.

KPIs vs Traditional Reporting Methods 

Let’s take a look at how firms benefit from KPIs and how KPIs differ from standard reporting. A common reporting technique is to compare current profit & loss results to the same period the previous year, or to compare year to date then versus year to date for the current year. Budget data for one or both comparisons can be incorporated. Now, what if we graphed this information and included a desired growth line? We will then have a visual of actual performance in relation to a chosen measurement. This measurement will inherently become an indication of whether we are achieving our goals, and would allow us to be proactive in correcting potential challenges. 

Using KPIs to Measure Success 

As mentioned earlier, KPIs are not just a tool for the finance team. For example, a chief operating officer may not relate well to traditional financial statements and focusing on project related metrics would be more to his liking. These indicators can be project specific, relate to a grouping of projects, or be sliced and diced based on the organizational breakdown structure (OBS) or work breakdown structure (WBS). Click here to learn more about OBS and WBS.

In another scenario, a chief strategy officer believes there is a benefit from evaluating trending data regarding hit rates filtered by a predetermined criterion. However, we must keep in mind that unless a benchmark or some other distinguished metric is established, this may not result in a clear and meaningful measurement. 

Here are two examples of KPIs that have proven to be successful: 

  1. Cost and Schedule Variance – Using Deltek Vision reporting, actual project cost performance index (CPI) and schedule performance index (SPI) is calculated and compared to an acceptable mean-variance.
  2. Estimate at Completion (EAC) Analysis – This can be as simple as a two-column report showing EAC in comparison to the contract value. The criteria can also be set by contract type to “flag” anomalies that need to be further investigated. 

The Bottom-line on KPIs 

KPIs can be used company wide. C-level executives can look across client and project types and evaluate revenue multipliers or collections success. These same evaluations can be done at all levels across your enterprise from managers that are accountable for sections of your organization down to individual project managers driving the lowest levels of WBS. What is required is a benchmark, a budget or a goal. Whether top down or bottom up, the view into why businesses perform the way they do will kept top of mind.

So, how does your firm measure success across the enterprise? Is it profit centers, projects, employees or pursuits? Every firm is unique and can’t just use “off the shelf” KPIs. It all begins with a discussion of what you need to drive your firm to the finish line. Once decided, designing the reports and data is easy.

Deltek Vision Performance Management  

Understanding and Effectively Using Cross Charge in Deltek Vision

Posted by Michael Kessler, PMP on March 01, 2017

Cross Charge BlogIn a previous blog, we reviewed multi-company functionality in Deltek Vision and learned how it serves as a tool for sharing and accounting for resources across the companies within an enterprise. Cross charge capabilities in Vision are based on similar theories as multi-company, but are focused on the interaction within a company and its organizational breakdown structure (OBS). Before we dive deeper, here are some links to blogs about multi-company functionality and OBS in case you are unfamiliar with these topics.

High Level Insight into Cross Charge in Deltek Vision 

It is important to understand that cross charging is a financial tool and is based on the general ledger. It is not an attribute of project reporting since time charged to a project remains on the project for billing and reporting purposes. Cross charge is labor focused and occurs after the timesheet is posted. 

By default, Vision is built to be project centric, which simply means that the process of entering and posting timesheets determines where the labor charges are assigned. If the cross charge process is not configured or run, the cost will remain on the “books” of the organization where the project is assigned. 

Why Use Cross Charge? 

As financial and operational managers, we must always remember that revenue can only be earned once and a cost incurred once. For this reason, cross charge allows businesses to move these elements in and out of various “buckets” within their organization. When a combined income statement is run, all cross charge entries will zero out and the original revenue and cost will remain. 

The cross charge process is used when firms loan and borrow labor at the lowest OBS level, which could be: 

  • Office
  • Department
  • Discipline
  • Market Sector 

A good example is a civil engineer where projects live in the various disciplines. The survey department would loan their staff to the engineering projects and cross charge would be the financial component to drive and manage the accounting for the labor. 

There are two internal pricing options to choose from when configuring cross charge: 

  1. Project Centric – This is when labor remains on the books of the organization where the project resides. A multiplier is then used to account for some portion of operational/overhead (OH) costs. This factor could be limited to a fringe benefit rate, could represent a breakeven OH rate or even include some profit. The purpose is to ensure that the loaning organization has an incentive to keep their staff busy, but they also need to be careful as to not over extend their resources. 
  1. Employee Centric – This works by adjusting labor back to the employee’s organization. Using typical billing rates, although a multiplier can be used, the revenue is moved from the projects to the employee’s organization. The purpose again is to ensure the loaning organization doesn’t lose the ability to show a profit by sharing their staff. 

Real-life Application of Cross Charge in Deltek Vision 

Here is a success story where the operational process and projects are built on the premise that fee and scope drives work breakdown structure (WBS) in a clients’ Deltek Vision database. Under this model, high accountability becomes the first option where phases and tasks within a project are assigned to different organizations based on the portion of the work. Employees then charge the phase/task that is assigned to the organization they “live” in. This results in more closely managed projects because the profit accountability is shifted back to the organization supplying the labor. This process eliminates the need for cross charge. 

But wait…realizing that in order to run successful projects, there is a necessity to anticipate unplanned needs. This means that the firm must have the ability to borrow an employee from another department for a short-term assignment or a last minute need. For example, the base building studio decides it needs input from the interiors studio. In this scenario, the client falls back on the project centric method noted above as a mechanism to facilitate resource sharing and not impede project progress. Furthermore, this is a prime example of a need for cross charge. 

Gain Control of Resources with Cross Charge 

Whether your current OBS is solid or you are considering a change, cross charge can provide the functionality required to ensure an open and smooth process of resource sharing. With a thorough understanding and effective implementation, cross charge can provide another dimension in managing your business.

Deltek Vision Navigational Analysis

 

Maximizing Organizational Breakdown Structure and Work Breakdown Structure in Deltek Vision

Posted by Michael Kessler, PMP on February 10, 2017

 

Organizational Breakdown Structure and Work Breakdown Structure As Deltek Vision systems are implemented and processes are written, the common denominator is most often the connection between the Organizational Breakdown Structure (OBS) and the Work Breakdown Structure (WBS). Whether it be the uniqueness of each or the relationship between the two, the attention paid to these early stages of development is instrumental in the flow and reporting of information in your Vision database. In the following, we’ll explore some areas to consider when designing the structure of your database.

Company Structure and the Organizational Breakdown Structure in Deltek Vision 

The OBS can take on many different builds from the very simple to extremely detailed. Various example options include: 

  • Location approach
  • Discipline/department approach
  • Market sector BD driven 

When designing the OBS in Deltek Vision, the system allows for up to five hierarchical levels and allocation of overhead requirements to be incorporated into the structure of the database. If you are using a multi-company database, then level one needs to be reserved for the different companies in your enterprise. Learn more about Vision Multi-Company in this article

Additionally, when building the OBS it is most important to be aware of financial accountability in your organization. For example, if you are using two levels, such as office and department, each combination will produce an income statement. As a result, someone within the organization is responsible for these statements. 

Furthermore, various cross sections can be extracted for combined financial reporting. For instance, if you have mechanical department in three offices, firms can create a mechanical income statement. A structure such as this allows for: 

  • Office accountability
  • Office/Department accountability
  • Overall Department accountability 

Projects and the Work Breakdown Structure in Deltek Vision 

The WBS specifically relates to how a project will be organized and the firm’s preference for the flow of revenue and costs. The majority of firms find it to be most effective if they build their WBS based on project budgets. Generally, this should be driven by the fee and scope using a bottom up approach. 

Deltek Vision allows for three levels in the WBS, which are commonly labeled, Project, Phase and Task. However, this can be tailored to your firm’s preference. Even more, accountability within a project can be assigned through the WBS. As a result, the entire project can have a manager and/or phase and task managers, which can be assigned based on the scope and budget responsibility. 

It is important to note that project builds and WBS don’t have to be the same across all projects. While not all firms are the same, it is highly recommended for most firms to let every project have at least one WBS 2. In other words, another WBS variation. Additionally, projects can be built with no WBS 3 or only some parts of the WBS 2 extending into the WBS 3. 

Team Work Makes the Dream Work 

Like the players on any type of team, the OBS and WBS need to play their roles both individually and in tandem to support the greater good of the team. The WBS at its lowest level drives how revenue and cost post to the lowest level of the OBS. Here are additional items to consider: 

  • “Mirroring” the OBS in WBS for overhead projects
  • The combinations of cross charge, intercompany billing and high accountability you plan to build into WBS
  • The division of financial and operational accountability

Final Thoughts 

In today’s robust business environment, many firms are evaluating and updating both their OBS and WBS in Deltek Vision. A popular build methodology is using both geography and market sectors to build and operate under a 3D matrix solution. When considering changes to your current structures, the help of both functional and data consultants can result in a new and more productive Vision system. Timing and cutover planning is essential to success. Now is the time to get creative and strive to get the most out of your operations. Deltek Vision Performance Management  

Using Multi-Company in Deltek Vision: The When, Why and How

Posted by Michael Kessler, PMP on January 18, 2017

 

Multi-Company ImageWithin Deltek Vision lies a very handy tool, which enables a firm to have multi-company functionality. However, the benefits of this multi-company functionality feature seem to elude many firms that would greatly appreciate its capabilities. So let’s talk in detail about multi-company functionality and the why, when and how firms should use this fantastic feature.

Intro into Deltek Vision Multi-Company

Basically the need for a multi-company environment comes down to having to track a separate entity with its own tax id number in a single Deltek Vision database. Some of the scenarios that require multi-company management include:

  • Banking relationships
  • Investments and/or holding company requirements
  • Tax reporting
  • Professional licensing requirements
  • Foreign country reporting requirements

Additionally, the need for intercompany billing can occur when two or more related companies make payments on behalf of the others. The most common reason for intercompany billing is the sharing of labor resources between companies that have separate payrolls and/or making vendor payments for another related company.

When a firm decides to utilize multi-company functionality, it is recommended that sub-ledgers be set up to track the due to and from, and clear intercompany balances. This creates the ability to use both the AP and AR aging reports for the intercompany balances.

Determine Internal Pricing Structure

Upon implementing multi-company functionality in Deltek Vision, firms must determine what internal pricing structure to adopt. The options are:

  • Re-class only - moves the transaction to intercompany AR/AP at cost
  • Project Centric - leaves the transaction on the books of the project’s company with some amount of compensation also moving to keep the loaning organization whole
  • Employee Centric - moves the transaction back to the employee’s company with some amount of revenue moving back as well
  • High Accountability – which uses work breakdown structure to manage transactions and point directly to the company who owns the transaction

Keep in mind, there is a lot of flexibility within the options above. Different scenarios can be created for different transaction types. Also, by order of operation, the various options can be overwritten at the individual company level or at the lowest work breakdown structure level by project.

Intercompany billing makes accounting’s job easier in regard to multi-company transactions. When transactions are made to projects not in the home company (company where the transaction is being posted), invoices and vouchers are created through a series of postings that are reflected in GLs of the respective companies. These invoices and vouchers also appear on the AR and AP aging reports noted above. Accounting can then clear the reports using standard check processing and cash receipts.

More Benefits of Multi-Company

Using Deltek Vision’s multi-company functionality provides another benefit to firms with consolidated reporting. Consolidated reporting allows a view of the performance of all the companies within the database. Consolidated groupings can represent all companies or a cross section of companies depending on the needs of company leadership. The consolidation process incorporates standard eliminations of configured control accounts as well as client-defined accounts, such as capital investments in related companies. Consolidations are “memo” entries and not posted to the GL.

A multi-company database permits each company to maintain a unique GL while still only creating one set of shared GL account numbers. Furthermore, firms can restrict GL account numbers, and other master records can be shared and/or restricted as well. Also, Vendors can be shared. However, the accounting tab is company specific for account and 1099 purposes.

In addition to the benefits mentioned above, the multi-currency function works in tandem with multi-company to allow firms to have unique GL/functional currency. This is a great feature for firms that work internationally. Lastly, the consolidation process can include GAAP compliant currency translation and a gains/losses entry.

Final Thoughts on Deltek Vision Multi-Company

Firms of all sizes can benefit in many ways by using the multi-company functionality that is part of the core capabilities in Deltek Vision. Being aware of when, why and how to use a multi-company database will help your firm make important business decisions and operate efficiently. For more information, contact Full Sail Partners here.

Deltek Vision

Why Your Firm Should Be Using Earned Value Management

Posted by Michael Kessler, PMP on November 10, 2016

Earned Value Management For project-based firms, measuring current firm performance is the most significant indicator of future firm performance. Furthermore, by using trend data, firms can forecast cost and schedule variances in the early stage of a project. A preferred method by project managers to factor this trend data is the earned value management technique.     

Using Earned Value Management

Earned value management allows firms to evaluate cost and schedule variances in both dollars and percentages on projects. These factors are derived by considering planned value, actual cost and earned value over time.

A common way of looking at earned value is by using both the financial percent complete job to date (JTD) and the estimate too complete (ETC) by using the formula, JTD/(JTD + ETC) and the project managers reported physical percent complete. These two factors when equated provide a quick and easy comparison. For example, the financial percent complete on construction documents may be at 75% when the reported percent complete on construction documents is 50%. There are several possible explanations for these variances, such as:

  • There were many revisions that were client driven and not in scope
  • The complexity of the work was under estimated
  • We have just been very inefficient

Keep in mind, there are a number of other scenarios that can also explain these factors as well.

Factoring Earned Value Management

Getting the information above is actually simple. It requires holding project managers to a high level of accountability. Project managers need to evaluate the amount of hours budgeted, hours burned (JTD), and the effort required to finish the scope of work (ETC).

As a result, this will produce the financial percent complete. Project managers then need to record where the project is from a physical percent complete, which should tie to progress on the project schedule.

Much like a crossover episode of two TV shows, this is where EVM crosses over with a previous blog about FASB 606. EVM will ultimately meet the requirements that in turn will keep the accounting team compliant with FASB 606.

Enter Deltek Vision

The Resource Planning module in Deltek Vision addresses EVM by:

  • Allowing the financial percent complete to be calculated
  • Providing a physical percent complete plan in the form of an EV%
  • A default report in the Resource Planning module known as the Earned Value Chart, which represents the S Curve

By maintaining a project plan in the Resource Planning module, firms can be successful in developing a project report that shows cost and schedule variances in both the dollars and percent (CV, SV, CPI and SPI). If your firm has a benchmark or standard range, you can then compare the actual to that standard to identify anomalies in your projects performance.

The title of this blog is, “Why Your Firm Should Use Earned Value Management” and the answers are:

  1. It’s an industry standard and proven method for project management and project accounting
  2. It’s a common language among project managers across industries
  3. It provides quick visibility into a projects performance
  4. It brings firms closer to compliance with FASB 606

Learn more about Michael Kessler and his more than 30 years of experience of working in and around project-based accounting here.

Revenue Generation

 

How Does the FASB 606 Impact AE Firms and How Can Deltek Vision Revenue Generation Help?

Posted by Michael Kessler, PMP on September 14, 2016

FASB 606Our first inclination when the new FASB 606 was announced was this wouldn’t impact many of our Deltek Vision clients. But after more insight, we recognize this has a tremendous impact on our clients. The rule states applicability to ALL entities that deliver goods or services. Though many believe that GAAP, FASB, SOX and other guidelines are good rules to follow regardless of any statutory relevance, the reality is if we are not being overseen we tend to be somewhat lax in compliance.

On May 2014, FASB issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers. As a result, nonpublic entities will be required to apply the revenue recognition standard. In the case of FASB 606, if you are subject to any audit oversight, whether it be the bank or a taxing agency, FASB 606 now becomes relevant. This is also relevant if revenue is used and or needed for verification. Lending institutions and those requiring financial statements for qualification have been requiring GAAP compliant financial statements and will likely begin to demand conformance to the new standards. Finally, CPAs offering attestation services will now give increased scrutiny to how firms recognize revenues on their contracts.

“Revenue is recognized when a company satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service).”

Architects, Engineers, and Professional Service Firms that “sell” labor and drawings fall under this definition and will be subject to FASB 606.

Enter Deltek Vision Revenue Generation

Using Deltek Vision Revenue Generation was always a good idea for Project Management as it allows us to begin recognizing what we have earned as compared to what has been spent. This is done by using basic revenue generation factors such as: 

  • Job to Date Spent (or as I refer to it “earn as you burn”)
  • Percentage of Complete
  • Milestones or Deliverables

Using Vision’s User Defined Revenue capabilities, these and other potential methods and formulas can also be developed.

Preparing Deltek Vision for FASB 606

All firms need to understand how this measure requirement relates to them and seek advice from CPAs and Tax Professionals to ensure they will meet the requirements. Our role is to work with you and your CPA to configure Deltek Vision appropriately to accommodate the methods. In advance of your discussion with your advisors, we will assist in the creation of commonly understood measures. 

To learn more about overall revenue recognition concepts in Deltek Vision, check out this past blog. For further information on how to set-up revenue generation methods related to FASB 606 in Deltek Vision, please reach out to us and a consultant will be in contact.

* Rana Blair contributed to this blog.

Revenue Generation

 

Fascinating Facts about Timesheets in Deltek Vision

Posted by Michael Kessler, PMP on June 08, 2016

Timesheets, Timeclock For project-based firms, timesheets are essential to ensure that an employee’s time is reflected to a specific project. I’m sure you already knew this, but do you manage timesheets correctly in Deltek Vision? Here are some facts and best practices for different scenarios to help you better manage timesheets in Deltek Vision.

Intro to Timesheets in Deltek Vision

Hopefully, one of the first things your Deltek Vision Consultant explained to you about timekeeping is that timesheets create payroll cost not payroll. As a “nuts and bolts” accountant, at least one side of our brain struggles with processing this information. So let’s break it down: 

  1. The employee’s job cost rate on the accounting tab of their info center should represent their rate of pay. If they are true hourly, this is quite easy to determine. On the other hand, if they are salaried the hourly rate should reflect their annual salary divided by 2080 hours.
  2. If adjusted salary job costing is used, the amount should reflect their salary based on the configured interval. For example, weekly, biweekly or a set number of days.

How Timesheets Work

When a timesheet is posted an amount based on the hourly rate multiplied by the hours charged is applied to the selected projects. Thereby creating direct or indirect (overhead) labor/payroll cost in the General Ledger. The credit created by the timesheet can go to either one of two places: 

  1. The Income Statement as job cost or payroll variance - This account is an overhead line item used to adjust the total of the timesheet posting to the actual payroll distributed. Furthermore, amounts that remain in this account after the payroll journal entry has been entered reflect a net of uncompensated overtime (OT) for salary staff (negative amounts), and based on this process, the premium portion of OT for hourly staff (positive amounts).
  2. The Balance Sheet as a payroll liability - After the payroll journal entry has been entered, the remaining amount needs to be reclassified to the Income Statement as stated above.

Accounting Tip for Paid Time Off

Have you ever noticed your Paid Time Off (PTO) balance not being relieved even during peak vacation periods? You might want to consider booking PTO taken to the Balance Sheet. To do this, you need to configure timesheet postings for PTO to go to a PTO liability account. Then when time off is taken and posted, the debit entry reduces the liability. Based on a true computed liability, an entry can be made on a pre-determined interval to accrue additional PTO and book the expense. If you are using benefit accruals in Vision, the entry can be taken from that report.

Handling Leave without Pay

Many firms fail to account for leave without pay (LWOP) properly. Sure, there is a need to track hours for statutory purposes when employees are on leave, however, no payroll cost should be recorded. The simple fix is to enable cost rate tables and attach one to LWOP projects. The table should contain either a labor code(s) or a list of employees with a ZERO job cost rate. This will override the employees default job cost rate and avoid any recording of payroll costs.

Punch the Clock

Some of this might seem complicated at first, but these best practices should help keep your books in order. I hope that this has taken the mystery out of Deltek Vision timesheets. Now punch the clock and update your timesheets.

Deltek Vision

 

 

Timesheets for Independent Contractors in Deltek Vision

Posted by Michael Kessler, PMP on March 23, 2016

TIMESH1.pngMost firms that I work with utilize independent contractors to supplement their workforce. This isn’t a blog about “walks and talks like an employee, must be an employee.” For that, I recommend a good labor attorney. However, what I am going to clue you in on is about the proper way to track and account for independent contractor’s time in Deltek Vision.

Processing Contractor Time in Deltek Vision

In most situations, the desire is for the contractor to complete a timesheet and submit an invoice for processing by Accounts Payable (AP). There are two prevailing methods within Deltek Vision to process these types of situations:

  1. Zero Job Cost Rate

The contractor is set up as an employee, but doesn’t have a job cost rate only a billing rate. When time is posted there is no entry to the General Ledger (GL), but both the Time and Materials (T&M) invoice and project ledger reflect a billing dollar value. As a result, the AP invoice creates the GL entry reflective of the true cost of the contactors time

  1. Job Cost Variance

For this option, setup the contractor as an employee with a job cost rate. When the timesheet posts, the cost gets booked to a unique GL code reflective of contract labor. Additionally, this cost can also be included in the base for an overhead calculation. The credit end of the timesheet posting goes to Job Cost Variance similar to all other timesheets. As a result, the AP invoice is booked to an overhead project using the Job Cost Variance Account and thereby clearing it.

That Seems Simple…Right?

This is where the accounting can start to go awry. If method one is used and care isn’t taken to ensure the AP doesn’t also create a bill extension (effort) then the potential for exposure can be:

  1. Double counting of effort in project reporting leading to an understatement of profit or positive variance.
  2. Double earnings of revenue if the method is associated to effort.

To alleviate these concerns, apply the following workaround in Deltek Vision:

  1. Create an expense GL code table under Billing/Billing Rate Tables.
  2. Enter the AP GL code used above and attach a “0” multiplier.

By following these steps, the AP billing value will not be included in project reporting and you will not experience the effects of doubling down on your effort.

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Handling Write-Offs the Right Way with Deltek Vision

Posted by Michael Kessler, PMP on February 17, 2016

WRITE-1.png

A common misconception for professional services firms is how to handle and manage write-offs of billable time and project expenses. For starters, understanding why write-offs (also known as "loses") occur is important. A common reason write-offs occur is the inefficient use of a person’s time and resources. You might ask, why do we not charge these expenses to the client if the time was spent or a resource was utilized for a specific project? Assuming these excesses were the result of your own firm’s inefficiencies and not a result of the client, absorbing these costs is fair to the client and also a good way to win more business from them. Additionally, if your firm is using Deltek Vision, handling write-offs is a simple process.

Write-Offs in Deltek Vision

Within Deltek Vision, write-offs will occur when a transaction posts. This will be identified for regular charge type projects as the following:

  1. Not earned in a revenue generation calculation
  2. Not invoiced either by:
    • leaving the transaction in B or to be billed status
    • leaving the transaction in H or held status
    • placing the transaction in W or to be written off status
    • placing the transaction in D or to be deleted status
In either case, the action of not billing or earning doesn’t remove the cost or burn value of the transaction from the project. This results in no matching revenue recognition, and let’s admit it, there is no way to delay the inevitable.

Tracking Losses in Deltek Vision
Now that the loss has occurred, it’s time to track them. Write-offs will appear in several places:

  1. As negative profit on a Project or Office Earning Report when run at “cost”
  2. As a negative variance on the above reports when run at “billing”
  3. On the Project Review screen (cost and billing tab) in the profit/variance box
  4. As a contributor to the Profit/Loss row on the Income Statement

Over the years, I have learned that not only best practice, but in many cases, statutory practice is to ensure when losses become apparent they must be addressed and accrued for in total. Using the functionality and reporting capabilities of Deltek Vision will provide the avenue to accomplish this.

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